Legal Environment of Business
Midterm Exam
Course Introduction
The Legal Environment of Business explores the framework of laws and regulations that influence business operations and decision-making. The course examines fundamental concepts of the U.S. legal system, including sources of law, court structures, and legal procedures, with a focus on how these impact businesses. Topics include contracts, torts, property law, agency, business organizations, employment law, and government regulation. Students will analyze real-world cases and learn how to identify and address legal issues in business scenarios, equipping them with the knowledge to make informed and ethical business decisions within the legal landscape.
Recommended Textbook Business Law in Canada 10th Canadian Edition by Richard A. Yates
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16 Chapters
2735 Verified Questions
2735 Flashcards
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Chapter 1: Managing Your Legal Affairs
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136 Verified Questions
136 Flashcards
Source URL: https://quizplus.com/quiz/47231
Sample Questions
Q1) Sophisticated clients who are starting a business should
A) make a commitment to ethical behaviour and prepare a statement of values.
B) only concern themselves with ethical behaviour that is required by law.
C) consult a lawyer about how to engage in unethical behaviour undetected.
D) refrain from reporting illegal or unethical behaviour.
E) opt not to prepare a code of conduct, because of potential liability exposure in the event of a breach.
Answer: A
Q2) When someone refers you to a particular lawyer,you should
A) retain the lawyer regardless of who gave you the referral.
B) ensure the referral is being given by someone you trust.
C) retain the lawyer regardless of his or her area of practice.
D) ensure the referral is from a family member, rather than a mere friend.
E) ignore the referral as irrelevant.
Answer: B
Q3) In addition to legal fees,what other costs is a client responsible for paying?
Answer: Disbursements (out-of-pocket costs incurred by the lawyer on the client's behalf).
Q4) In the lawyer-client relationship,who is the decision maker?
Answer: the client
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Chapter 2: Introduction to the Legal System
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164 Verified Questions
164 Flashcards
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Sample Questions
Q1) All provincial bills require royal assent of the Governor General before they can become law.
A)True
B)False
Answer: False
Q2) Stare decisis can contribute to stagnation.
A)True
B)False
Answer: True
Q3) Legislation prohibiting all prison inmates from voting in federal elections was found to constitute an unjustified denial of the right to vote.
A)True
B)False
Answer: True
Q4) The body of law developed by the Courts of Chancery is called ________. Answer: equity
Q5) Which province in Canada continues to use a civil code system? Answer: Quebec
Q6) The law of equity was developed by ________. Answer: the Courts of Chancery
Page 4
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Chapter 3: The Resolution of Disputesthe Courts and Alternatives to Litigation
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220 Verified Questions
220 Flashcards
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Sample Questions
Q1) Contrast the position of the victim in a criminal and a civil trial.
Answer: In a civil trial,the victim is usually the one suing the defendant,whereas in a criminal trial,the victim is a witness and the Crown or government is prosecuting.
Q2) What does a successful negotiation require?
Answer: Negotiation requires an understanding of the issues and a willingness to cooperate and compromise.
Q3) Indicate the jurisdiction of the small claims court in your area.
Answer: This will vary from province to province.For example,in British Columbia and Alberta,it is civil matters up to $25 000.
Q4) Judicial review is an appeal of the decision to a higher court.
A)True
B)False
Answer: False
Q5) Prohibition involves the decision of the decision maker being quashed or of no effect.
A)True
B)False
Answer: False
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Chapter 4: Intentional Torts and Torts Impacting Business
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150 Verified Questions
150 Flashcards
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Sample Questions
Q1) Read the following and indicate the false statement.
A) If a person were given a blood transfusion after making it clear that she didn't want one, the cause of action would be defamation.
B) If a person suffers a loss because a salesman knowingly made a false statement that he knew the other would rely on to his detriment, the cause of action could be deceit.
C) If falling over boxes wrongfully left in his garage by a delivery company injured a person, the cause of action could be trespass.
D) If a person suffers damage because of wiring improperly installed by John for his employer, World Wires Ltd., the cause of action against John could be negligence, and World Wires Ltd. could be sued as well.
E) If the odour from a neighbour's smokehouse made it impossible for you to use your pool, the proper action is nuisance.
Q2) Explain in what circumstances the defence of absolute privileges is available in defamation action.
Q3) "In order for a person to successfully sue for an assault and battery,damage or injury must be demonstrated." Comment on the accuracy of this statement.
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Chapter 5: Negligence, Professional Liability, and Insurance
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159 Verified Questions
159 Flashcards
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Sample Questions
Q1) Joe entered a store and approached a display of china.He was examining an extremely valuable vase and carelessly dropped it,destroying it.Which of the following is correct with respect to his liability?
A) If the store has insurance coverage, the insurance will cover his careless conduct and he doesn't have to worry about anything.
B) If the store has insurance coverage, the insurance will pay the store for the loss but can go after Joe for repayment by suing him for negligence.
C) Joe cannot be sued for the loss because Joe is not a party to the insurance contract.
D) If the store does not have insurance coverage, they should have and so Joe has no responsibility in these circumstances.
E) Joe is responsible only if the store has no insurance coverage.
Q2) Joe was a customer in Sam's store when he carelessly dropped a very expensive vase,but he was relieved when he found that Sam had insurance to cover the loss.Explain Joe's legal position in these circumstances.
Q3) Explain how the courts determine whether a duty of care exists in a negligence action.
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Chapter 6: The Elements of a Contractconsensus and Consideration
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171 Verified Questions
171 Flashcards
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Sample Questions
Q1) Which of the following would best satisfy the requirements for a good legal offer?
A) "I'll pay you at least $300 for your horse, Blackie, and even more if the horse is lucky."
B) "I'll drive you to Seattle on Saturday."
C) "The purchaser will pay $1000 for one of the seller's laser printers, the exact model to be determined at a later date."
D) "I'll give you $1 for your new green bike."
E) On a flyer placed on your windshield):"We have the best offer in town! A mint 1956 Chevrolet for $20 000."
Q2) Which of the following is not an example of a contract?
A) a written promise to give your husband a ring for christmas
B) a verbal agreement to work for someone starting next week
C) a verbal agreement for the sale of a car where neither the money nor the car has yet changed hands
D) an agreement not to sue someone for negligence in exchange for their promise to pay you a specified amount
E) an implied promise to pay for a meal when you order it
Q3) What is a subject to clause?
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Page 8
Chapter 7: The Elements of a Contract capacity, Legality, and Intention
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161 Verified Questions
161 Flashcards
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Sample Questions
Q1) The case of Canadian Imperial Bank of Commerce v.Milhomens examined the effect of one party's insanity on a contract.What did the Court find?
A) For a contract to be voidable because of insanity, one party must be insane and the other party must have known (or ought to have known) of the insanity.
B) If a person has the mental faculties to sign a contract, that person cannot be insane.
C) If a insane person enters into a contract, that contract is automatically void.
D) Contracts are not enforceable by either party if one party can establish a mental defect.
E) The relevant test for insanity is simply whether one party believed the other to be insane, at the moment the offer was made.
Q2) "Contracts must be in writing to be enforceable." Discuss the accuracy of that statement.
Q3) All contracts must be written to be binding.
A)True
B)False
Q4) Describe how infants are treated in contract law in Canada.
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Page 9
Chapter 8: Factors Affecting the Contractual Relationship
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184 Verified Questions
184 Flashcards
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Sample Questions
Q1) Privity of contract is a principle that holds that a contract can only affect the immediate parties to it.
A)True
B)False
Q2) Victims of misrepresentation who have affirmed the contract are bound by the affirmation and cannot later insist on ______________.
A) rescission
B) remedies
C) breach
D) original positions
E) quantum meruit
Q3) Indicate three situations where the courts will presume a relationship to involve undue influence.
Q4) Sam agreed to buy property from Joe to build a store of a certain design.Joe,the vendor,was aware of the design and knew that an easement across the back of the property would prevent such a building being erected,but said nothing.Sam purchased the property,later discovered the easement,and learned that Joe knew about it.He sued for misrepresentation.Discuss the likely outcome.
Q5) What does it mean that an assignee is "subject to the equities"?
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Chapter 9: The End of the Contractual Relationship
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173 Verified Questions
173 Flashcards
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Sample Questions
Q1) Explain how a fundamental breach affects the application of an exemption clause.
Q2) "Clean hands" refers to the absence of wrongdoing on the part of a person seeking an equitable remedy.
A)True
B)False
Q3) An agreement to end a contract,with extra consideration to be supplied by the party benefiting from the discharge,is known as ________.
Q4) The victim of a breach cannot recover damages that she could have avoided if she had made a reasonable effort.
A)True
B)False
Q5) Lack of financial ability,if proven,will establish frustration.
A)True
B)False
Q6) The Frustrated Contracts Act today requires that when a deposit is paid,the costs incurred can be split out of the deposit.
A)True
B)False
Q7) Explain what is meant by "specific performance" in contract law.
Page 11
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Chapter 10: Employment
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164 Verified Questions
164 Flashcards
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Sample Questions
Q1) Distinguish between a rights dispute and an interest dispute.
Q2) Which of the following statements is correct with respect to workers' compensation?
A) Workers' compensation is a voluntary system in place whereby employers, should they so desire, participate in an insurance program covering accidents that take place on the job.
B) Workers' compensation in each province is a compulsory program whereby employers participate in an insurance program covering accidents and disease arising from the job.
C) If an employee is hurt on the job and it is her own fault, she will not be covered by workers' compensation.
D) The workers' compensation system is totally financed through government grants.
E) When an employee is injured on the job, the workers' compensation system gives that employee the choice of claiming workers' compensation or suing the employer or fellow employee who caused the injury.
Q3) Explain why picketing can be effective.
Q4) Distinguish between arbitration and conciliation or mediation.
Q5) What is the significance of a union becoming certified?
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Page 12
Chapter 11: Agency and Partnership
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219 Verified Questions
219 Flashcards
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Sample Questions
Q1) The ratification of a contract by the principal must be done in writing.
A)True
B)False
Q2) Explain what is meant by an agent's "fiduciary duty." Give three examples of how that fiduciary duty can be breached.
Q3) Because of an alarming drop in the earnings of Microminds Ltd.,Roger,the principal contract negotiator and president of the software development company,called a meeting to discuss productivity and customer satisfaction.At the meeting were Michael,troubleshooter,who helped customers over the phone who needed guidance in using the company's software; Ralph,receptionist and purchaser of the office supplies for the company; Keith and Jason,salespeople hired on a commission basis-i.e.,not as employees but as independent contractors; Mr.Toman,purchasing agent for the Vancouver School Board,an important customer; and Mr.Rice,purchasing agent for Matol Toys Ltd.,also a customer.Which of these is an agent?
A) all of them
B) all of them except Keith and Jason
C) all of them except Michael
D) Roger, Toman, and Rice only
E) only Roger
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Page 13
Chapter 12: Corporations
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155 Verified Questions
155 Flashcards
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Sample Questions
Q1) Directors owe a fiduciary duty to the shareholders.
A)True
B)False
Q2) If a director fails in his duty to the corporation,what rights does a minority shareholder have to hold him accountable?
Q3) Explain the nature of the director's duties to the corporation.
Q4) When lending money to a closely held corporation,what will a bank usually insist on from the major shareholders or other principals?
A) a debenture
B) a negotiable instrument
C) a fiduciary obligation
D) a preemptive right
E) a personal guarantee
Q5) Indicate two examples where a director can be personally liable for the debts of the corporation.
Q6) Preferred shareholders usually get preference when dividends are declared but no vote.
A)True
B)False
Page 14
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Chapter 13: Real, Personal, and Intellectual Property
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238 Verified Questions
238 Flashcards
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Sample Questions
Q1) Define "equity of redemption" and briefly discuss its origin.
Q2) What is a chattel?
Q3) Distinguish between real and personal property.
Q4) In Canada,there is no right to patent methods of carrying on business as yet,but business method patents are available in the United States.
A)True
B)False
Q5) Discuss how the normal rules in relationship to residential tenancies have been modified in your jurisdiction by statute,and discuss the effectiveness of such changes in terms of the objectives of the statutes.
Q6) The courts have had difficulty deciding whether computer programs are covered by copyright legislation or not.Discuss how this has been resolved.
Q7) What is the significance of an item being identified as a trade fixture?
Q8) When the author assigns his copyright to a purchaser,what rights does he still have in relation to the work?
Q9) A gratuitous bailment can occur when someone borrows an item from a neighbour. A)True B)False
Page 15
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Chapter 14: Information Technology and the Internet
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143 Verified Questions
143 Flashcards
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Sample Questions
Q1) Discuss the scope and purpose of PIPEDA.
Q2) Canada's Uniform Electronic Commerce Act creates rights and obligations with respect to electronic commerce transactions within Canada.
A)True
B)False
Q3) The selling of securities also poses particular problems when done online.Discuss.
Q4) Explain "degree of interactivity."
Q5) Credit cards,debit cards,and other forms of electronic money replace negotiable instruments in online transactions.
A)True
B)False
Q6) Discuss the problems with internet transactions.
Q7) UECA provisions determine that whether a contract or another form of internet communication,a message is sent as soon as it is committed to the system,and it is received as soon as it arrives on the recipient's computer,even if it is never read.
A)True
B)False
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Chapter 15: Sales and Consumer Protection
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157 Verified Questions
157 Flashcards
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Sample Questions
Q1) The principles of freedom of contract and caveat emptor have been completely done away with by the Sale of Goods Act.
A)True
B)False
Q2) There is a cooling off period in all consumer sales transactions where the purchaser of goods has a period of time in which to change his mind.
A)True
B)False
Q3) Which of the following is not controlled by consumer protection legislation?
A) false advertising
B) the investigation of complaints
C) unconscionable transactions
D) business transactions
E) unequal bargaining power that is abusive
Q4) Distinguish between a sale and an agreement to sell.
Q5) Sales made to consumers at their dwellings or places of business are known as ________.
Q6) What is a cooling-off period?
Q7) Explain under what circumstances the sale of goods must be evidenced by writing.
Page 17
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Chapter 16: Priority of Creditors
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141 Verified Questions
141 Flashcards
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Sample Questions
Q1) With regard to negotiable instruments,which of the following is false?
A) A cheque is a bill of exchange drawn on a bank, payable on demand.
B) A cheque that has been certified cannot be countermanded by the drawer.
C) A negotiable instrument used to advance credit in a consumer transaction must be marked "consumer purchase."
D) Bills of exchange can be made payable for some future date.
E) A drawer of a cheque can refuse to pay any holder of it if the drawer can prove that the payee obtained the cheque by fraud.
Q2) Distinguish between a guarantee and an indemnity.
Q3) Some debtors can submit a reorganization proposal to avoid bankruptcy.
A)True
B)False
Q4) If a fraudulent transfer is made to a bona fide purchaser for value,the transaction can still be reversed for a period of one year.
A)True
B)False
Q5) What is a floating charge?
Q6) Give three examples of types of things that can be used as security under the Personal Property Security Act.
Page 18
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